Director duties and risk governance | The practical lesson from ASIC’s Star update

ASIC has announced that the Federal Court found two former senior executives of The Star Entertainment Group Ltd breached their duties in relation to their handling of risks associated with money laundering and criminal activity at a major casino. ASIC also stated that the Court found the non-executive directors did not breach their duties in the case.

The point for businesses is not that every governance failure automatically becomes a director-liability case. It is more practical than that: when serious risks arise, organisations need a clear, evidenced system for identifying, escalating and responding to them.

Governance is judged through records

Risk governance often looks simple in hindsight. A regulator, court or opposing party may ask: who knew what, when did they know it, what options were considered, and why was a particular decision made?

That is why records matter. Board papers, management reports, risk registers, emails, committee minutes, action lists and external advice can become central evidence. They may show that a risk was actively managed. They may also reveal gaps, delay or unclear responsibility.

For boards and executives, the practical issue is not to record everything. It is to record the right things clearly: the risk, the decision-maker, the escalation path, the action required, the timing and the basis for the decision.

Executives and boards have different roles

ASIC’s media release is also a reminder that executive and non-executive roles are not identical. Executives are often closer to operational risk and implementation. Non-executive directors rely on reporting systems, management briefings and board processes, while still needing to engage with serious issues.

That distinction matters for legal risk. A governance framework should make clear which risks are owned by management, which are escalated to the board, and what information the board needs to make informed decisions.

Ambiguity is expensive. If responsibility is spread across multiple people but not clearly assigned, the organisation may spend more time reconstructing decisions after the event than managing the risk in real time.

How businesses can reduce governance risk

Businesses should consider whether their risk-governance process answers these questions:

• What risks must be escalated to senior management or the board?

• Who owns each major risk?

• What reports are required, and how often?

• Are decisions and action items recorded?

• Is legal advice sought early enough for serious regulatory or litigation exposure?

• Are high-risk matters revisited until they are resolved?

• Can the organisation produce a clear chronology if challenged?

A chronology is particularly useful. When a matter becomes contentious, a well-prepared chronology can reduce legal cost by helping lawyers identify the key decisions, documents and witnesses quickly. It can also reveal whether the organisation’s records support the position it wants to take.

The Law Flow Lens

AI-assisted legal work can help with the lower-value but time-consuming parts of governance review: organising board papers, extracting dates, comparing versions of reports, building document lists and preparing first-pass chronologies.

But the judgment calls remain legal and strategic. What does a duty require in context? Was escalation adequate? What evidence matters? How should privilege be protected? What should be disclosed, remediated or contested?

That is the model Law Flow is built around: less process waste, more legal judgment. Efficient legal work is not about automating responsibility. It is about using better workflows so lawyers and clients can focus on the decisions that matter.

This article is general information, not legal advice. For advice about your circumstances, contact Law Flow.

Short Source List

• ASIC — Federal Court finds two Star Entertainment senior executives breached duties, non-executive directors did not breach duties: https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-040mr-federal-court-finds-two-star-entertainment-senior-executives-breached-duties-non-executive-directors-did-not-breach-duties/

• ASIC — Obligations of company officeholders: https://www.asic.gov.au/for-business-and-companies/companies/company-officeholder-rules-and-changes/obligations-of-company-officeholders/